Gold and silver bulls work on price stabilization

September 22, 2020

London (Sept 22)  Gold and silver prices are slightly lower in the early U.S. trading Tuesday, as the bulls need to see prices stabilize in order to avoid serious chart damage, following Monday’s drubbing. October gold futures were last down $2.10 at $1,900.00 and December Comex silver was last down $0.132 at $24.26 an ounce.

Monday’s mostly downside price action in raw commodity futures markets, led by the huge declines in gold and silver, rattled heretofore confident commodity bulls. If the raw commodity markets can show price stability the rest of this week, following Monday’s drubbing, most will escape with their near-term price uptrends still in place and with no technical damage. However, more solid downside price pressure this week would end most commodity markets’ near-term price uptrends. Thus, trading action the rest of this week will be extra important for many raw commodity markets, including the metals.

Global stock markets were mixed overnight, with Asian shares mostly down and European shares mixed to firmer. U.S. stock indexes are set to open the New York day session mixed. Risk aversion is keener early this week as Covid-19 infections are on the rise in Europe and in parts of the U.S., prompting new worries about businesses locking down again. The death of Supreme Court Justice Ruth Bader-Ginsburg has shifted focus away from Congress providing a new stimulus package for U.S. citizens and businesses. U.S.-China trade and political tensions continue to run hot. And many in the marketplace believe the U.S. presidential election results will be disputed and protracted. All of the above may well keep stock market traders in a dour buying mood right in the middle of a time of year that history shows stock markets can get very wobbly.

Fed Chairman Powell and U.S. Treasury Secretary Mnuchin will testify to a House financial services committee Tuesday morning. Powell is expected to say the Congress needs to do more to keep the U.S. economy afloat.

The important outside markets today see the U.S. dollar index slightly higher following solid gains Monday that pushed the USDX to a six-week high. Nymex crude oil prices are firmer and trading around $40.00. Meantime, the yield on the U.S. Treasury 10-year note is trading around 0.67% today.

U.S. economic data due for release Tuesday includes the weekly Johnson Redbook and Goldman Sachs retail sales reports, the Richmond Fed business survey, and existing home sales. Several Federal Reserve officials are slated to give speeches today.

Technically, the gold bulls have the overall near-term technical advantage but are fading and need to show fresh power to keep the near-term price uptrend alive. Bulls’ next upside price objective is to produce a close in October futures above solid resistance at this week’s high of $1,954.10. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the August low of $1,865.00—which would negate the near-term price upternd. First resistance is seen at the overnight high of $1,916.80 and then at $1,930.00. First support is seen at the overnight low of $1,890.70 and then at $1,875.00.


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